OAK BROOK, Ill., April 22, 2014 /PRNewswire/ -- McDonald's
Corporation today announced results for the first quarter ended
March 31, 2014, reflecting higher
revenues compared with the prior year, while earnings per share for
the quarter declined primarily due to the impact of prior year
income tax benefits.
"At McDonald's, we aspire to be our customers' favorite place
and way to eat and drink, and our actions are grounded in creating
the best overall experience for our customers," said McDonald's
President and Chief Executive Officer Don
Thompson. "In the near term, we are prioritizing our efforts
around those elements of the restaurant experience that are most
impactful - offering the best food and beverage options and
delivering outstanding service. For the long term, we are focused
on more effectively leveraging consumer insights to guide our
global growth priorities of optimizing our menu, modernizing the
customer experience and broadening accessibility to brand
McDonald's. We are intent on pursuing initiatives that will
strengthen our relationship with our customers to reignite our
business momentum."
First Quarter results included:
- Global comparable sales increase of 0.5% reflecting
higher average check, as well as negative guest traffic in the U.S.
and Asia/Pacific, Middle East and Africa (APMEA)
- Consolidated revenues increase of 1% (3% in constant
currencies)
- Consolidated operating income decrease of 1% (1% increase
in constant currencies)
- Diluted earnings per share of $1.21, decrease of 4% (2% in constant
currencies)
- Returned $1.2 billion to
shareholders through dividends and share repurchases
In the U.S., comparable sales decreased 1.7% in the first
quarter, and operating income declined 3%. Top-line results for the
quarter reflected negative comparable guest traffic amid
challenging industry dynamics and severe winter weather. Looking
ahead, the U.S. remains focused on improving the restaurant
experience through a continued commitment to operations and service
excellence, customer engagement and menu choice to drive sales and
profitability.
During the first quarter, Europe grew comparable sales 1.4%, and
operating income by 6% (4% in constant currencies). Positive sales
performance in the U.K., France
and Russia was partially offset by
ongoing weakness in Germany.
Across Europe, a combination of
unique limited-time food events, premium offerings and everyday
affordable pricing contributed to positive performance.
APMEA's first quarter comparable sales increased 0.8% and
operating income declined 10% (2% in constant currencies). Solid
comparable sales performance in China and many other markets was somewhat
offset by weakness in Japan, and
to a lesser extent, Australia.
Ongoing premium product innovation, convenience and affordability
options were sales drivers for the quarter.
Looking forward, McDonald's is focused on stabilizing key
priority markets including the U.S., Germany, Australia and Japan.
Don Thompson concluded, "In
today's dynamic global marketplace, our goal is to ensure that we
are evolving to remain a relevant and trusted brand by serving
great-tasting, high-quality, affordable food and creating memorable
experiences with our brand. By leveraging a deeper understanding of
what our customers want with the power of our business model, our
investments in restaurant capabilities and modernization, and our
hard-earned competitive advantages, we will grow McDonald's
business and deliver enduring profitable growth over the long term.
As we begin the second quarter, global comparable sales for the
month of April are expected to be modestly positive."
KEY HIGHLIGHTS -
CONSOLIDATED
Dollars in millions,
except per share data
|
|
Quarters Ended
March 31,
|
2014
|
|
2013
|
|
Inc/
(Dec)
|
|
Inc/ (Dec)
Excluding
Currency
Translation
|
Revenues
|
$
|
6,700.3
|
|
$
|
6,605.3
|
|
1%
|
|
3%
|
Operating
income
|
1,936.0
|
|
1,949.5
|
|
(1)
|
|
1
|
Net income
|
1,204.8
|
|
1,270.2
|
|
(5)
|
|
(3)
|
Earnings per
share-diluted*
|
$
|
1.21
|
|
$
|
1.26
|
|
(4)%
|
|
(2)%
|
|
|
*
|
Foreign currency
translation had a negative impact of $0.03 on diluted earnings per
share for the quarter.
|
THE FOLLOWING DEFINITIONS APPLY TO THESE TERMS AS USED
THROUGHOUT THIS RELEASE
Comparable sales represent sales at all restaurants and
comparable guest counts represent the number of transactions at all
restaurants, whether operated by the Company or by franchisees, in
operation at least thirteen months including those temporarily
closed. Some of the reasons restaurants may be temporarily closed
include reimaging or remodeling, rebuilding, road construction and
natural disasters. Comparable sales exclude the impact of currency
translation. Comparable sales are driven by changes in guest counts
and average check, which is affected by changes in pricing and
product mix. Generally, pricing has a greater impact on average
check than product mix. Management reviews the increase or decrease
in comparable sales and comparable guest counts compared with the
same period in the prior year to assess business trends. The number
of weekdays and weekend days, referred to as the calendar
shift/trading day adjustment, can impact comparable sales and guest
counts. In addition, the timing of holidays can impact comparable
sales and guest counts.
Information in constant currency is calculated by translating
current year results at prior year average exchange rates.
Management reviews and analyzes business results excluding the
effect of foreign currency translation and bases incentive
compensation plans on these results because they believe this
better represents the Company's underlying business trends.
RELATED COMMUNICATIONS
This press release should be read in conjunction with Exhibit
99.2 in the Company's Form 8-K filing for supplemental information
related to the Company's results for the quarter ended March 31, 2014.
McDonald's Corporation will broadcast its investor conference
call live over the Internet at 10:00 a.m.
Central Time on April 22,
2014. A link to the live webcast will be available at
www.investor.mcdonalds.com. There will also be an archived webcast
and podcast available for a limited time.
The Company plans to release April
2014 sales information on May 8,
2014.
ABOUT McDONALD'S
McDonald's is the world's leading global foodservice retailer
with over 35,000 locations serving approximately 70 million
customers in over 100 countries each day. More than 80% of
McDonald's restaurants worldwide are owned and operated by
independent local business men and women.
FORWARD-LOOKING STATEMENTS
This release contains certain forward-looking statements, which
reflect management's expectations regarding future events and
operating performance and speak only as of the date hereof. These
forward-looking statements involve a number of risks and
uncertainties. The factors that could cause actual results to
differ materially from our expectations are detailed in the
Company's filings with the Securities and Exchange Commission, such
as its annual and quarterly reports and current reports on Form
8-K.
McDONALD'S
CORPORATION
CONDENSED
CONSOLIDATED STATEMENT OF INCOME
|
|
|
Dollars and shares
in millions, except per share data
|
|
Quarters Ended
March 31,
|
2014
|
|
2013
|
|
Inc/
(Dec)
|
Revenues
|
|
|
|
|
|
|
|
Sales by
Company-operated restaurants
|
$
|
4,490.5
|
|
$
|
4,445.4
|
|
$
|
45.1
|
|
1%
|
Revenues from
franchised restaurants
|
2,209.8
|
|
2,159.9
|
|
49.9
|
|
2
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES
|
6,700.3
|
|
6,605.3
|
|
95.0
|
|
1
|
|
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
|
|
Company-operated
restaurant expenses
|
3,767.1
|
|
3,726.0
|
|
41.1
|
|
1
|
Franchised
restaurants—occupancy expenses
|
417.1
|
|
395.2
|
|
21.9
|
|
6
|
Selling, general
& administrative expenses
|
620.4
|
|
596.5
|
|
23.9
|
|
4
|
Other operating
(income) expense, net
|
(40.3)
|
|
(61.9)
|
|
21.6
|
|
35
|
Total operating costs
and expenses
|
4,764.3
|
|
4,655.8
|
|
108.5
|
|
2
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
1,936.0
|
|
1,949.5
|
|
(13.5)
|
|
(1)
|
|
|
|
|
|
|
|
|
Interest
expense
|
135.5
|
|
128.1
|
|
7.4
|
|
6
|
Nonoperating (income)
expense, net
|
17.2
|
|
4.6
|
|
12.6
|
|
n/m
|
|
|
|
|
|
|
|
|
Income before
provision for income taxes
|
1,783.3
|
|
1,816.8
|
|
(33.5)
|
|
(2)
|
Provision for income
taxes
|
578.5
|
|
546.6
|
|
31.9
|
|
6
|
|
|
|
|
|
|
|
|
NET INCOME
|
$
|
1,204.8
|
|
$
|
1,270.2
|
|
$
|
(65.4)
|
|
(5)%
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE-DILUTED
|
$
|
1.21
|
|
$
|
1.26
|
|
$
|
(0.05)
|
|
(4)%
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding-diluted
|
995.9
|
|
1,010.8
|
|
(14.9)
|
|
(1)%
|
SOURCE McDonald's Corporation